Creating v converting demand

Converting demand is easy, per Telstra CMO Brent Smart. Building demand is the hard part – and most brands have got it all wrong, he reckons, blowing holes in their own P&L and churning out over-researched mush often based on “artificial” feedback from customers.

“You've got to convert demand that's there and ready to buy. That’s half the job, but frankly, it's the easiest bit. We've got incredible tools to target, to get the right message to the right person, to measure how that worked – unbelievable tools that we never dreamed of a decade ago. It's easy,” Smart told a room packed with marketers at Mutinex’s Marketers & Money summit.

“The really hard bit is building a brand in a way that [registers with] someone who's not in market, who has no interest in your category, is giving you no signals or data or anything that they're interested. The only way I know of that you can talk to that person, connect to that person, create a memory structure, is a piece of brand creative. It’s the absolute killer app to just get someone to pay attention, to care, to connect, even though they're not in your category.

“They might not buy your product or your brand next month, next year, three years, who knows when? But you can still create a connection, something in that person's brain that is going to cause them to be more likely to buy your product,” said Smart.

“So the idea of future demand is really powerful. If all you're doing is converting existing demand, you'll not create any future demand or future growth for your company.”

One job

Telstra, he said, has “hundreds of people with customer in their title … and they do an amazing job of serving our [existing] customers. But I believe there is one department that is thinking about customers we don’t have yet – marketing. We can create future customers. That is super powerful and that is the conversation to have with your CEO and CFO.”

Which is why Smart remains brand or bust, an anachronism in a sector obsessed by personalisation and lower funnel performance – i.e. short-term demand conversion – and where top marketers are expected to be brilliant across the gamut of data, analytics, brand, performance, finance, product, supply and the rest.

“It’s not about awards, my ego, vanity … It’s because that’s the smartest commercial decision I believe you can make as a marketer.”

He said those lionising bold, risk-taking marketers (often creative agencies praying for a client still willing to spend big on a decent ad) actually have it all wrong.

“The biggest commercial risk is taking no creative risk. There's this big misnomer about the brave, courageous marketer who buys creative ideas. I think the bravest marketer is one who buys something boring. They're really brave – they're getting fired in a couple of years. They're buying something that is invisible, that will not do anything and will have no business impact. So they’re the brave ones, not me. I do it because I think it's a smart commercial decision.”

Unfocus groups

By Smart’s reckoning, most of Australia’s big brand marketers are therefore getting fired sooner rather than later – because their brands “all look the same”, all crib “the same best practice playbooks”, and all paint by numbers with the same approach to creative testing. The result is not branding, but “generic blanding” – and pre-testing, says Smart, has much to answer for (he thinks System1 is “probably the best of a bad bunch”.)

“When you test stuff, when you put things in front of consumers, they gravitate to stuff that looks the same, that's familiar, that's safe,” per Smart.

“In 20 years in agencies and now seven years of being a CMO, I've never seen that type of testing make an idea better. They just dumb it down and make it worse, because people will always gravitate to the familiar and be scared of the new. It is human nature."

Focus group processes are “artificial” anyway, per Smart.

“No one spends that much time looking at your ad, thinking about your ad. If they do, they are a freak … Everyone watches more ABC and eats less McDonald's in a focus group than they do in real life. People talk bullshit in focus groups. You’ve got to get deeper than that. If all you're working on is awareness, consideration, likeability and sentiment, do you really know about your brand?”

That’s especially true of understanding non-customers – otherwise they will never become future customers and brands won’t grow. Smart’s approach on joining Telstra from insurer IAG was to dive into community groups via ethnographic studies – basically get a bunch of friends together and talk to them in the pub, their homes, the footy.

“It’s really important to get three friends together. They actually tell you what they really feel, they call each other out when they're bullshitting, and it's a really fantastic dynamic.” He then got the friends to draw what they felt about Telstra. The results were “pretty confronting” (Smart divulged them under the Chatham House rule, but Mi3 can’t report them), “but those three images were a mandate for me to reinvent the brand”, per Smart. “There was instant buy-in from leadership.”

The approach likewise underlines the importance of applying creative marketing internally – how to present data creatively when top brass see the same formulaic presentations, slides and charts from every department and supplier.

“We’re all drowning in data, yet we have so few insights … You are the marketer, tell a story,” said Smart.

Plus, “always be marketing marketing; always put in the case and provide the evidence of how it’s working and what it is doing … ‘here’s how the brand work we are doing will increase margin’ … You have got to talk about how you are driving growth. The worst thing a CMO can do is hide behind a bunch of confusing media or marketing metrics that no one understands apart from you,” said Smart. “If you're talking to your CFO about your social metrics, you deserve to be fired.”

Metrics rebuilt

Smart underlines that he’s also highly focused on “winning the weekly trading battle” when it comes to retail performance marketing and the instant feedback and “incredible granularity by channel, by product” that brings.

“Our job as marketers is to drive demand into channels – we don’t close the sale, but we can drive demand in. So we are very focused on demand and have a very granular understanding of it … But on the brand [aspect], you have to keep an eye on the longer-term growth, the longer-term brand metrics and all the rest of it.”

Hence Smart has been building new brand metrics since starting at Telstra two years ago –  because “blunt” metrics like brand awareness just don’t cut it, given it has 100 per cent brand awareness.

“If the job is to drive growth and future demand, you have to think what are the important parts of that? … We’ve ended up with [a metric] we call ‘brand strength’ and it’s an aggregation of four different measures which we roll up into a score – and it is great to have a score,” said Smart. “’Here’s what we are doing this quarter, here is how it compares to the competition’ … and ultimately, over time, you can start showing how that brand strength score correlates with business performance. That's a really great conversation to have.”

Of the metrics that matter, two are top of Smart’s list.

“You've got to be looking at mental availability. It’s been proven time and time again by [Ehrenberg-Bass Institute director] Byron Sharp. I’m also a massive believer in momentum,” said Smart.

“There are two types of brand in the world. Brands with momentum and brands without momentum. The problem for a lot of legacy brands – incumbent brands, leader brands, brands like Telstra – is they used to have momentum, and they're clinging to what they had versus creating new momentum. I'm really focused on having the most momentum in the category. We need to be measuring that, driving that – and make sure we’re fuelling that every quarter.”

MMM’s power

While speaking at Mutinex’s conference, Smart said Telstra is a believer in marketing mix modelling (MMM), but doesn’t currently use the firm’s platform.

“Full disclosure, we did an RFP [for an MMM provider] before I joined and [Mutinex] didn’t get it,” said Smart, somewhat apologetically. “But we are building a new marketing mix model.”

Either way, “the best thing about having a marketing mix model, if you spend a lot of money, is it protects your budget. If the CFO says ‘we are going to cut budget by $10m’ you can say ‘let me just run the numbers on that’. Then you can say, ‘okay, you’re going to cut my budget by $10m but that is going to result in a $30m top line impact. So you are saving $10m to lose $30m. Still want to do it?’ Suddenly, they might give you $10m more and it becomes a very different concept,” said Smart. “So that is where [MMMs] are amazing in terms of protecting your budget, how different channel contribute and also understanding base level of sales … and the marginal gains we can get [from a given action].”

MMM's powerlessness

But when it comes to media, said Smart, brands can deploy all the MMMs they like and still come up short if the creative is just another piece of safe, average pap – and the same applies to media planning.

“If it’s invisible anyway, you’ve just wasted all that time. Everything else is academic … If you think about the world we live in, there is a stupid amount of content, infinite content … and yet every consumer I talk to says the same thing – [lack of] time. So infinite content and finite time is a recipe for disaster for every marketer,” said Smart.

“Attention is the scarcest resource in the world right now, and unless you do something worthy of their attention, you're properly fucked," he added.

"So I think the biggest and hardest job for any marketer is distinctiveness. If you make your brand distinctive, it will stand out. That's the job. It's easy to make stuff that looks like everyone else."